Tata Steel sheds 580 jobs in Wales, with several sites to close

The Welsh Government describes the announcement as 'a massive blow to those who will be losing their jobs'

Steel giant Tata is cutting 900 jobs and closing 12 sites under plans to improve competitiveness, the firm announced today.

Most of the job losses will be in south Wales, including 500 at the Port Talbot plant, under restructuring of management and administrative posts.

A total of 580 jobs will be cut in Wales, 155 in Yorkshire, 120 in the West Midlands and 30 on Teesside.

The proposals include the restructuring of management and administrative functions at Tata Steel’s Port Talbot-based production hub with the loss of around 500 jobs. Around 3,500 are currently employed at the site.

The company is also planning to close its sites at Tafarnaubach and Cross Keys. Production from Tafarnaubach will be relocated to other sites, while the Colorsteels operation will be relocated to Tata Steel’s key site at Shotton, in north Wales, with the creation of 38 new roles.

Under the proposals a total of 76 jobs will be lost at Tafarnaubach and a further 87 at Cross Keys.

Tata Steel is also planning to rationalise its steel finishing and processing operation in the UK. Its services will be concentrated at six UK distribution and processing hubs, which will benefit from £22m of new investment, but will result in the closure of 12 sites.

Among the sites earmarked for closure as part of that move are the distribution centre in Caldicot, which employs 55, a sheet centre and service centre at Llanwern, employing 28 and 19 respectively, and a metals centre at Port Talbot, which employs four.

However, a new service centre will be created at Llanwern, employing 65 staff.

Shift levels at the company’s Rotherham and Hartlepool plants will be reduced to match production to lower demand for bar products and pipelines.

There was one element of better news, with the announcement that the Indian-owned company is to restart Port Talbot’s Blast Furnace No.4 early next year.

The blast furnace has been rebuilt as part of a £250m investment programme at the Margam works and its lighting will also lead to the restarting of the hot strip mill at the company’s Llanwern site in Newport. The Llanwern site will benefit from the establishment of a new heavy gauge decoiling facility. As a result 120 new posts will be created at Llanwern.

Karl Kohler, chief executive of Tata Steel’s European operations, said: "Today’s proposals are part of a strategy to transform ourselves into an all-weather steel producer, capable of succeeding in difficult economic conditions.

"These restructuring proposals will help make our business more successful and sustainable, but the job losses are regrettable and I know this will be a difficult and unsettling time for the employees and their families affected.

"We will be working with our trade unions and government at a national and local level to ensure we provide them with as much assistance and support as possible.

"In addition, our subsidiary UK Steel Enterprise will be looking at how it can provide more support to local steel communities and stimulate new jobs following today.s announcement.

"We will strengthen this work with a further £650,000 to help them create new jobs in affected areas. UK Steel Enterprise has teams in all the affected locations who, for almost four decades, have helped to regenerate local economies and create 70,000 new jobs in the UK.

"We will do everything we can to reduce the impact of the proposals on employees and, where possible, we will look to achieve job losses through voluntary redundancies."

Tata said demand for steel in Europe had fallen by 25% since 2007 and was forecast to slump by another 10% this year.

The company, which employs 19,000 in its steel business in the UK, said it remained committed to investing in the business to help create long-term stability.

A Welsh Government spokesman said: "This is very disappointing news, and a massive blow to those who will be losing their jobs.

"The Welsh Government has a very strong relationship with the company and officials will now work with Tata to establish a task force and identify what support we can provide for those affected.

"Tata's decision reflects the serious and ongoing challenges faced by manufacturing industries during these very difficult economic times. In addition to these challenges, it is clear that high energy costs and uncertainty over UK Government energy policy are having a significant impact on business investment decisions. As a Government, we have warned for some time of the need for these costs to be reduced.

"Despite today's news, Tata's commitment to relight Blast Furnace 4 at Port Talbot and restart the Hot Mill at Llanwern illustrates the company's continued belief in its Welsh workforce.

"The UK Government must now deliver quickly on its commitment on a fit for purpose support package to compensate energy intensive industries for the impacts of energy and climate change policies and help ensure they are able to compete internationally."

Secretary of State for Wales, David Jones said: "There is no denying the challenging conditions businesses are facing in the global marketplace. Today’s announcement by Tata Steel will impact on many in South Wales, but whilst it will not give the individuals affected comfort, this commercial decision is one that has been undertaken to ensure Tata’s UK operations can remain competitive.

"I have been assured that Tata remains committed to having a strong presence in Wales and the UK as a whole.

"The news that Tata is expected to light Blast Furnace 4 in the first quarter of 2013 is welcome news, as is the the creation of 120 new jobs at the hot strip rolling mill at Llanwern and 65 new jobs at its distribution centre.

"However, the loss of over 500 jobs in Wales is a short and sharp reminder of the challenges facing businesses globally. Both Governments in Whitehall and Cardiff need to be relentlessly focused on the economy and I am committed to working with the Welsh Government to ensure we succeed in this area.

"Jobcentre Plus are ready to support employees should there be any redundancies. I am in close communication with officials at Tata and I will be seeking an early meeting with them to discuss the level of support that can be provided in light of today’s announcement, and to ensure that everything possible is done to help those affected by it."

Michael Leahy, general secretary of the Community trade union, said: "This news will be of great concern to many of our members and their families.

"We will be seeking an urgent meeting with the company to ensure our principle of no compulsory redundancies is upheld, although we are pleased to see the company has already committed to offering a package of training and support for those affected by these changes.

"Sadly, these potential job losses are symptomatic of the continuing failure of the Government’s economic policy and yet another reason why we are calling on the British Government to take urgent action to stimulate economic growth and help revive the manufacturing sector.

"This announcement comes after a four-year-long downturn in the UK Tata and European steel industry, where the fall in UK steel demand has been steeper than in any other major European economy.

"This is why we need faster investment in infrastructure programmes and community benefit clauses in UK procurement, just as France and Germany do to support their own manufacturing industry."

Blast Furnace 4 has been rebuilt as part of a £250m investment programme at the Margam works and will also lead to the restarting of the hot strip mill at the company’s Llanwern site in Newport.

Dr Köhler said: "The restarting of the Port Talbot furnace will improve our competitiveness and allow us to enjoy the benefits of a modern, state-of-the-art furnace, which, combined with the planned downstream investments, will also enable us to improve customer service. Although slightly delayed because of the current market conditions, restarting the furnace will allow us to return to sustainable production levels."

Speaking then Tata Steel Europe’s chief executive Dr Karl-Ulrich Köhler said: "European steel demand and prices have weakened since the spring and this took its toll on our financial performance.

"Our response has been to accelerate our efforts to reduce those costs that we can influence.

"We are also bringing forward our new product development schedule and other elements of our market differentiation strategy. We expect the benefits of these actions, aimed at meeting our long-term goal of becoming an ‘all-weather’ business, to be reflected in future performance."

Next page: Analysis: Tragic news for those affected but a more efficient steel industry may lead to future growth for Wales.

The job cuts are tragic news for those affected but a more efficient steel industry may lead to future growth for Wales, said a labour market expert.

David Blackaby, Economics Professor at Swansea University, said Tata's job cuts and £250m investment in its Welsh steel operation was a necessary step for a strong long-term strategy.

He said: "While it's tragic for individuals, Tata operates in competition and they have to be cost efficient.

"This should reduce their cost base and I assume that's why they've done it, to control cost at a time when demand for steel is falling.

"We know many companies held onto workers hoping the economy would pick up. The Bank of England recently reduced forecast for the economy and as it's been slower than expected companies have started to make cost savings."

Prof Blackaby said Tata's investment in re-opening the Hot Mill in Llanwern and Blast Furnace 4 at Port Talbort was positive news, as it suggested that Welsh steel production would expand in the future.

"What's important for Wales is even if Tata cuts back in the future, hopefully it won't cut back more in Wales," he said.

"If Tata expands in the future we would want these sites to be right for development.

"The fact that Tata invested shows that they saw a future for Welsh plants. The fact that they invested in something that's going to last 10, even more, years is a positive thing.

"There are also talks going forward of plans to mine coal in Port Talbot, which is another positive sign of a future in Port Talbot."

But because Tata is an international company, Prof Blackaby said it was difficult to be confident about when the company might develop further in Wales.

"If it was just one plant in Swansea you could make a forecast for steel but because Tata has plants all over the world they've got to make decisions about where to invest, and they can produce in India, in Europe, in the rest of the UK", he said.

And Prof Blackaby said those who lost their jobs would struggle to find a comparably well paid job.

He said: "Obviously it's devastating news for those people who are going to lose their jobs given the enormous social consequences of unemployment.

"Usually when people lose their jobs, if they can get a new job it usually has reduced earnings.

"Tata seems to be a socially responsible company and is concerned, as British Steel used to be, and will likely have policies in place for helping people to find work."

But while job cuts were "devastating" for those affected, Professor Blackaby said Tata's plans for Wales were "hopefully not all bad".

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